HKEx to balance cooperation, competition with China, CEO says

HKEx bought LME for $2.2 billion

Hong Kong Exchanges & Clearing Ltd. will balance competition and cooperation with China and introduce new cash-settled commodity products, said Charles Li, chief executive officer of the company that owns the London Metal Exchange.

The bourse would probably introduce monthly cash-settled metals products denominated in Chinese yuan first then move into other commodities and physical settlement, Li said at the LME Week in Hong Kong. The Hong Kong exchange operator will not be shy about fee increases when they are allowed to, he said.

“We are not seeking to change it but we look to profit from it,” Li said of the business model. “We will be seeking return from our investment in a fair and reasonable way.”

Hong Kong Exchanges bought the LME for $2.2 billion in December in its first foray into commodities, planning to push into China, the world’s largest user of industrial metals that U.K. bourse lists. As they develop their commodity platform, Li said they would strive to balance between cooperation and competition with mainland exchanges.

The company will study the potential development of yuan-denominated commodity products for HKEx platforms, Li said yesterday at the signing of a memorandum of understanding with Bank of China Ltd. The bank clears the currency for Hong Kong, Macau and Taiwan and its investment-banking unit became an LME clearing member last year.